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Federalism is the sharing of power between national and local levels of government such as states, provinces, territories, counties, and cities and is thus a system characteristic that creates considerable opportunities for experimentation in environmental politics. The term is derived from the Latin term foedus, meaning league or covenant, and allows the development of multiple channels of authority that, in turn, enlarge the policymaking process along a range of environmental issues from acid rain to climate change.

Although applied in countries as diverse as Australia, Brazil, Canada, Germany, India, Malaysia, Mexico, Nigeria, and the United States, federalism is relatively uncommon across the globe today. Unitary systems such as those found in Cameroon, France, Italy, Japan, Kenya, South Korea, Sweden, and the United Kingdom, to name but a few, are considerably more prevalent. Although some delegation of authority may still occur, it is more along the lines of administrative duties, as the central government retains much more authority than in federal systems. A third and even less common democratic system is a confederation, such as the United States under the Articles of Confederation (1783–89).

Confederations tend to be weak and unstable, as political governance is dominated by regional governments, and central sovereign authority is severely limited by an inability to gather taxes and the lack of a chief executive.

In contrast, federalism, and the power-sharing system it creates, fosters innovative experimentation in legislation, including environmental politics. The United States, the first to institute a written constitution formalizing federalism, illustrates just how complicated this can become, with over 83,000 subnational jurisdictions (i.e., states, cities, counties, and school districts), all with the power to tax, spend, and make public policy. A confusing myriad certainly, but also one that is often praised as the ideal “laboratories of democracy,” as U.S. Supreme Court justice Louis Brandeis famously asserted in his dissenting opinion to New State Ice Co. v. Leibmann (1932).

Nothing illustrates this better on the environmental policy front than the progression of state acid rain programs in the 1970s and 1980s that allowed for testing ideas that eventually coalesced into federal law under the U.S. Clean Air Act amendments in 1990. Environmental activists hope California and the California Global Warming Solutions Act of 2006, which mandates a new reporting system, overall cap on carbon dioxide, and roduction cut back to 1990 levels by 2020, will play the same defining role in limiting greenhouse gases nationwide.

Still others believe municipalities to be the most appropriate level for effective climate change policy to evolve. And although the United States abdicated international environmental leadership during President George W. Bush's administration in the early 21st century, federalism allowed over 900 different mayors, since Kyoto entered force in February 2005, to carve out their own initiative—the U.S. Mayors Climate Protection Agreement. Under this agreement, participating cities commit to pressure state and federal governments to meet Kyoto reduction numbers, lobby the U.S. Congress for a national emission trading system, and meet Kyoto Protocol targets in their own municipalities.

The historical evolution of federalism offers further insight here. Federalism has roots dating back to the Roman Empire, which facilitated governance over large territories by discouraging those who were conquered from putting up further resistance against Rome, as they were allowed to maintain certain local powers. Modern principles of federalism emerged in the United States with the 1787 Constitutional Convention and the ensuing debate among federalists and antifederalists. Of particular note, The Federalist Papers, written by Alexander Hamilton, James Madison, and John Jay, was a direct attempt to convince New York state citizens to vote for Constitutional ratification by highlighting weaknesses within the Articles of Confederation.

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